Not many people dispute the notion that investment is crucial to economic growth and prosperity, and that a favorable investment climate is essential for the promotion of entrepreneurial dynamism. There is no consensus, however, about what constitutes an investment climate and the best way to convince policymakers of taking the necessary measures to improve it. In this distinguished lecture, Mr. Nicholas Stern provides a convincing answer to both questions. Stern starts his analysis with a broad framework for development, which places equal emphasis on investment and the empowerment of the poor. His discussion of the investment climate – under macroeconomic stability, infrastructure, and governance/institutions – is founded on hard evidence drawn from firm-level surveys conducted in developing countries. The emphasis on hard evidence is not accidental. Rather, it reflects the view that the collection and dissemination of such evidence is a powerful tool for bringing about improvements in the investment climate.